Why Apple's iPad E-Book Numbers Are Confusing and Misleading

The iPad (AAPL) is no longer a mythical beast, but a real-life gadget that prompted throngs of people to line up outside Apple Stores in the early hours of Saturday morning. (I, too, couldn't quite resist the lure and headed to a New York City Apple Store to try one out -- with some unfortunate results.)

Now the publishing industry has what it has been waiting anxiously for: numbers. On Monday morning, Apple announced that it sold approximately 300,000 iPads -- a great deal less than the amount one overly eager analyst predicted, but still substantial. The company also said that newly minted iPad owners downloaded 1 million apps from its App Store and 250,000 e-books from its iBookstore on opening day. While these numbers sound suitably impressive, a closer look at the figures raises more questions than answers.

Free Books Inflate Numbers

The key word with respect to the e-book numbers, for example, is "downloaded," not "sold." An anecdotal survey of iPad users indicates that those who used the iBookstore app generally downloaded free e-books or sample chapters over paid books. Apple's specific word usage seems to indicate that it's counting such gratis e-books among its total downloads -- a move that takes a page from Amazon's (AMZN) playbook of old, when 64 of its top 100 Kindle books were available for free.

While 250,000 e-books downloaded may still sound like a big number (even with the freebies thrown in), all told it adds up to an average of less than one e-book per iPad. Looked at another way, a minimum of 50,000 iPads bought on Saturday - or 16.7% of all sold - do not have any downloaded e-books on them.

Eoin Purcell of Irish Publishing News also raised questions about the figures: Of the 1 million downloaded apps, how many of them were specifically book-related, like the ones on offer from Amazon, Kobo, or Wattpad? There might have been 250,000 e-books downloaded through the iBookstore, but that itself is an app that had to be downloaded separately - so that total is perhaps a great deal less than 250,000.

A Kindle Killer in Our Midst?

With only approximately 60,000 e-books available in the iBookstore, primarily from the so-called "Agency Five" of HarperCollins (NWS), Penguin (PSO), Macmillan, Simon & Schuster (CBS) and Hachette (LGGDY) (which sorted out its agency model deal with Amazon by Saturday), even the slightly higher prices don't yet signal a lot of money to be made through the iBookstore.

Of course, it would be foolish to make binding judgments about the iPad's viability as a game-changer for the publishing industry after one weekend. As a dedicated e-reading device, it probably won't kill the Kindle, not when the glare is too bright and the weight too heavy for lengthy reading in the sunlight. The overall e-book downloads suggests the iPad is more suited to the occasional reader than the avid one. With a few tweaks, Amazon's Kindle for iPad app (or apps available or pending from Kobo or Barnes & Noble [BKS]) may completely outclass the iBookstore, even though the latter presents e-books in all their color-drenched beauty.

I suspect a more substantive verdict will be made once Apple rolls out its higher-priced 3G iPad by month's end. By that time, Random House may actually decide it's worth its while to sign on with Apple, having let its competitors test the waters first. There will undoubtedly be more book-related apps, and the iBookstore might even come preloaded on the 3G model so that new customers will gravitate to what's instantly there instead of hunting and fishing for what's available to download.

At the moment, the iPad may be more of a media-driven hype machine than actual phenomenon, but all it takes is the right app at the right time - and for publishing, a plethora of new customers to increase ever-exploding e-book sales - to transform possibility into real dollars. In the meantime, as Forrester Research analyst James McQuivey says, "this match is far from over and even if Amazon takes Round 2, there's a lot of fight left in all these fighters. And that's just the way it's supposed to be."